STATE of ILLINOIS DEPARTMENT of COMMERCE and ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION for the Two Years Ended June 30, 2016 P
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STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 Performed as Special Assistant Auditors For the Auditor General, State of Illinois STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 TABLE OF CONTENTS Page Agency Officials 1 Management Assertion Letter 3 Compliance Report: Summary 5 Independent Accountant’s Report on State Compliance, on Internal Control Over Compliance, and on Supplementary Information for State Compliance Purposes 9 Schedule of Findings Current Findings – State Compliance 12 Prior Findings Not Repeated 39 Supplementary Information for State Compliance Purposes: Schedule Summary 40 Fiscal Schedules and Analysis Schedule of Appropriations, Expenditures and Lapsed Balances Fiscal Year 2016 1 42 Schedule of Appropriations, Expenditures and Lapsed Balances Fiscal Year 2015 2 45 Comparative Schedule of Net Appropriations, Expenditures, Reappropriated and Lapsed Balances 3 48 Comparative Schedule of Net Appropriations, Expenditures, Reappropriated and Lapsed Balances By Detail Object Code 4 61 Comparative Schedule of Net Appropriations, Expenditures, Reappropriated and Lapsed Balances By Fund 5 63 Schedule of Changes in State Property 6 65 Comparative Schedule of Cash Receipts 7 66 Reconciliation Schedule of Cash Receipts to Deposits Remitted to the State Comptroller for Fiscal Year 2016 8 72 Reconciliation Schedule of Cash Receipts to Deposits Remitted to the State Comptroller for Fiscal Year 2015 9 73 Analysis of Significant Variations in Expenditures 10 74 Analysis of Significant Variations in Receipts 11 78 Analysis of Significant Lapse Period Spending 12 80 Analysis of Accounts Receivable 13 82 i STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 TABLE OF CONTENTS (Continued) Schedule Page Analysis of Operations Agency Functions and Planning Program (Not Examined) 83 Budget Impasse Disclosures (Not Examined) 86 Alternative Financing in Lieu of Appropriations and Programs to Address Untimely Payments to Vendors (Not Examined) 87 Interest Costs on Fiscal Year 2016 Invoices (Not Examined) 89 Average Number of Employees (Not Examined) 90 Grant Management Projects (Not Examined) 91 Memorandums of Understanding (Not Examined) 140 Service Efforts and Accomplishments (Not Examined) 141 Schedule of Indirect Cost Reimbursements and Administrative 164 Costs (Not Examined) ii STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 AGENCY OFFICIALS Director Sean McCarthy (effective 4/1/16) James Schultz (through 3/31/16) Andria Winters, Acting (through 2/15/15) Adam Pollet (through 1/19/15) Assistant Director Brittany Ladd, Acting (effective 9/19/16) Andria Winters (through 9/1/16) Dan Seals (through 8/31/14) Chief of Staff Anthony Esposito (effective 2/23/16) Heidi Brown-McCreery (through 2/22/16) Andrew Moyer (through 9/19/14) Chief Operating Officer Emily Monk (effective 9/19/16) Brittany Ladd (through 9/18/16) Michael Hoffman (through 1/04/16) Chief Financial Officer Travis March (effective 6/16/15) Anita Patel (through 5/19/15) Chief Accountability Officer Emily Monk, Acting (effective 04/01/16) Phil Wyatt, Acting (through 03/31/16) Scott Harry (through 1/15/15) General Counsel Justin Heather (effective 4/1/15) Charles Biggam III (through 3/31/15) Agency Procurement Officer Rick Rogers Information Management/ Emmanuel Ladalla (effective 11/16/16) Chief Information Officer Lisa Logan, Acting (through 10/15/16) Kevin Harrison (through 4/15/16) Chief Internal Auditor Natalie Covello (effective 9/21/15) Gary Shadid (through 12/15/14) 1 STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 Department offices are located at: 607 East Adams 500 East Monroe Springfield, Illinois 62701 Springfield, Illinois 62701 100 West Randolph Street 2309 West Main Suite 3-400 Marion, Illinois 62959 Chicago, Illinois 60601 The Department maintains additional office locations at: Local Offices Springfield, Chicago, Marion Regional Offices Central – Springfield (same as local office) Southeast – Effingham North Central – Peoria, Canton Northeast – Lisle, Chicago (same as local office) Northern Stateline – Rockford Northwest – Viola Southern – Marion (same as local office) West Central – Galesburg, Quincy Foreign Offices Western Europe – Brussels, Belgium North Asia – Tokyo, Japan Far East – Wanchai, Hong Kong CentralAmerica/Caribbean – Mexico City, Mexico Latin America – Sao Paolo, Brazil Canada – Toronto, Ontario China – Shanghai, China Middle East – Jerusalem, Israel India – New Delhi, India Africa – Johannesburg, South Africa 2 MANAGEMENT ASSERTION LETTER March 15, 2017 E.C. Ortiz & Co., LLP Certified Public Accountants 333 S. Des Plaines, Suite 2-N Chicago, Illinois 60661 Ladies and Gentlemen: We are responsible for the identification of, and compliance with, all aspects of laws, regulations, contracts, or grant agreements that could have a material effect on the operations of the State of Illinois - Department of Commerce and Economic Opportunity (Department). We are responsible for and we have established and maintained an effective system of internal controls over compliance requirements. We have performed an evaluation of the Department’s compliance with the following assertions during the two-year period ended June 30, 2016. Based on this evaluation, we assert that during the years ended June 30, 2016 and June 30, 2015, the Department has materially complied with the assertions below. A. The Department has obligated, expended, received and used public funds of the State in accordance with the purpose for which such funds have been appropriated or otherwise authorized by law. B. The Department has obligated, expended, received and used public funds of the State in accordance with any limitations, restrictions, conditions or mandatory directions imposed by law upon such obligation, expenditure, receipt or use. C. The Department has complied, in all material respects, with applicable laws and regulations, including the State uniform accounting system, in its financial and fiscal operations. D. State revenues and receipts collected by the Department are in accordance with applicable laws and regulations and the accounting and recordkeeping of such revenues and receipts is fair, accurate and in accordance with law. 3 E. Money or negotiable securities or similar assets handled by the Department on behalf of the State or held in trust by the Department have been properly and legally administered, and the accounting and recordkeeping relating thereto is proper, accurate and in accordance with law. Yours very truly, State of Illinois - Department of Commerce and Economic Opportunity Sean McCarthy, Director Travis March, Chief Financial Officer Justin Heather, General Counsel 4 STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 COMPLIANCE REPORT SUMMARY The compliance testing performed during this examination was conducted in accordance with Government Auditing Standards and in accordance with the Illinois State Auditing Act. ACCOUNTANT’S REPORT The Independent Accountant’s Report on State Compliance, on Internal Control Over Compliance and on Supplementary Information for State Compliance Purposes does not contain scope limitations, disclaimers, or other significant non-standard language. SUMMARY OF FINDINGS Number of Current Report Prior Report Findings 12 11 Repeated findings 9 6 Prior recommendations implemented or not repeated 2 3 SCHEDULE OF FINDINGS Item No. Page Description Finding Type FINDINGS (STATE COMPLIANCE) 2016-001 12 Weaknesses in Controls over Grant Administration Noncompliance and Significant Deficiency 2016-002 14 Noncompliance with the Fiscal Control and Noncompliance and Internal Auditing Act Significant Deficiency 2016-003 16 Failure to Submit, or Timely Submit Required Noncompliance and Reports Significant Deficiency 2016-004 18 Boards, Commissions, Committees and Councils Noncompliance and Not Fully Staffed Significant Deficiency 5 STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE EXAMINATION For the Two Years Ended June 30, 2016 COMPLIANCE REPORT SCHEDULE OF FINDINGS (CONTINUED) Item No. Page Description Finding Type FINDINGS (STATE COMPLIANCE) (CONTINUED) 2016-005 22 Noncompliance with Statutory Mandates Noncompliance and Significant Deficiency 2016-006 26 Noncompliance with the Employment and Noncompliance and Economic Opportunity for Persons with Significant Disabilities Task Force Act and Illinois Deficiency Employment First Act 2016-007 28 Noncompliance with the Retailers’ Occupation Noncompliance and Tax Act Significant Deficiency 2016-008 29 Failure to Comply Certain Provisions of the Noncompliance and Public Utilities Act Significant Deficiency 2016-009 31 Exceptions Identified With Interagency Noncompliance and Agreements Significant Deficiency 2016-010 33 Employee Performance Evaluations were Not Noncompliance and Completed Annually and Timely Significant Deficiency 2016-011 35 Weaknesses in Controls over State Property Noncompliance and Significant Deficiency 2016-012 37 Weaknesses over Employee Time Reporting Noncompliance and Significant Deficiency 6 STATE OF ILLINOIS DEPARTMENT OF COMMERCE AND ECONOMIC OPPORTUNITY COMPLIANCE